Homeland Security:

DHS Requires More Disciplined Investment Management to Help Meet Mission Needs

GAO-12-833: Published: Sep 18, 2012. Publicly Released: Sep 19, 2012.

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What GAO Found

Nearly all of the Department of Homeland Security (DHS) program managers GAO surveyed reported their programs had experienced significant challenges. Sixty-eight of the 71 respondents reported they experienced funding instability, faced workforce shortfalls, or their planned capabilities changed after initiation, and most survey respondents reported a combination of these challenges. DHS lacks the data needed to accurately measure program performance, but GAO was able to use survey results, information DHS provided to Congress, and an internal DHS review from March 2012 to identify 42 programs that experienced cost growth, schedule slips, or both. GAO gained insight into the magnitude of the cost growth for 16 of the 42 programs, which increased from $19.7 billion in 2008 to $52.2 billion in 2011, an aggregate increase of 166 percent.

DHS acquisition policy reflects many key program management practices that could help mitigate program risks. It requires programs to develop documents demonstrating critical knowledge that would help leaders make better informed investment decisions when managing individual programs. However, DHS has not consistently met these requirements. The department has only verified that four programs documented all of the critical knowledge the policy requires to proceed with acquisition activities. Officials explained that DHS’s culture has emphasized the need to rapidly execute missions more than sound acquisition management practices. Most major programs lack reliable cost estimates, realistic schedules, and agreed-upon baseline objectives, limiting DHS leadership’s ability to effectively manage those programs and provide information to Congress. DHS recognizes the need to implement its acquisition policy more consistently, but significant work remains.

DHS acquisition policy does not fully reflect several key portfolio management practices, such as allocating resources strategically, and DHS has not yet re-established an oversight board to manage its investment portfolio across the department. As a result, DHS has largely made investment decisions on a program-by-program and component-by-component basis. The widespread risk of poorly understood cost growth, coupled with the fiscal challenges facing the federal government, makes it essential that DHS allocate resources to its major programs in a deliberate manner. DHS plans to develop stronger portfolio-management policies and processes, but until it does so, DHS programs are more likely to experience additional funding instability, which will increase the risk of further cost growth and schedule slips. These outcomes, combined with a tighter budget, could prevent DHS from developing needed capabilities.

DHS has introduced seven initiatives that could improve acquisition management by addressing longstanding challenges GAO and DHS survey respondents have identified, such as funding instability and acquisition workforce shortfalls. Implementation plans are still being developed, and DHS is still working to address critical issues. Because of this, it is too early to determine whether the DHS initiatives will be effective, as GAO has previously established that agencies must sustain progress over time to address management challenges. DHS is also pursuing a tiered-governance structure, but it must reduce risks and improve program outcomes before regularly delegating major milestone decision authority.

Why GAO Did This Study

DHS invests extensively in major acquisition programs to develop new systems that help the department execute its many critical missions. In 2011, DHS reported to Congress that it planned to invest $167 billion in these major acquisition programs. We previously found that DHS had not managed its investments effectively, and its acquisition management activities have been on GAO’s High Risk List since 2005. This report addresses the extent to which (1) major DHS acquisition programs face key challenges; (2) DHS has policies and processes to effectively manage individual acquisition programs; (3) DHS has policies and processes to effectively manage its portfolio of acquisition programs as a whole; and (4) DHS has taken actions to address the high-risk acquisition management issues GAO has identified in previous reports. GAO surveyed all 77 major program offices DHS identified in 2011 (92 percent response rate), reviewed available documentation of acquisition decisions from November 2008 to April 2012, and interviewed officials at DHS headquarters and components.

What GAO Recommends

GAO recommends that DHS modify its policy to better reflect key program and portfolio management practices, ensure acquisition programs fully comply with DHS acquisition policy, prioritize major acquisition programs departmentwide and account for anticipated resource constraints, and document prerequisites for delegating major milestone decision authority. DHS concurred with all of GAO’s recommendations, and noted its progress on a number of fronts, which is accounted for in the report.

For more information, contact John Hutton at (202) 512-4841 or huttonj@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Comments: In providing comments on this report, DHS concurred with this recommendation, and stated that it was in the process of revising its policy to more fully reflect key program management practices. However, as of August 2016, DHS had not yet finalized all of the pertinent updates to its acquisition policy.

    Recommendation: To help mitigate the risk of poor acquisition outcomes and strengthen the department's investment management activities, the Secretary of Homeland Security should direct the Under Secretary for Management to modify DHS acquisition policy to more fully reflect the following program management practices: (1) Require that (a) programs demonstrate technologies in a realistic environment prior to initiating development activities, and (b) manufacturing processes be tested prior to production; (2) Require that (a) exit criteria be quantifiable to the extent possible, and (b) consistent information be used across programs at ADE 2B and 2C; (3) State that program managers should remain with their programs until the next major milestone when possible.

    Agency Affected: Department of Homeland Security

  2. Status: Closed - Implemented

    Comments: In providing comments on this report, DHS concurred with this recommendation, and stated that it would continue to mature and solidify the portfolio review process over the next few years. DHS also stated that it would revise its policy to reflect this process. In March 2016, DHS updated its acquisition management instruction, and established that DHS's Chief Financial Officer (CFO) is responsible for reviewing acquisition programs' status, evaluating the budget impacts of breaches and delays, and examining affordability through the annual resource allocation process, among other things. The March 2016 guidance also states that the CFO shall establish policies for DHS's Planning, Programming, Budgeting, and Execution (PPBE) process--which DHS uses to allocate resources--and oversee the integration of the PPBE system. In July 2016, DHS updated its PPBE guidance, and this new guidance fully reflects key portfolio management practices. Given the CFO's acquisition-management responsibilities, and the CFO's opportunities to leverage DHS's PPBE process to meet these responsibilities, GAO has determined that the acquisition policy and PPBE guidance updates address the intent of the recommendation.

    Recommendation: To help mitigate the risk of poor acquisition outcomes and strengthen the department's investment management activities, the Secretary of Homeland Security should direct the Under Secretary for Management to modify DHS acquisition policy to more fully reflect the following portfolio management practices: (1) Empower portfolio managers to decide how best to invest resources; (2) Establish that investments should be ranked and selected using a disciplined process; (3) Establish that (a) resource allocations should align with strategic goals, and (b) the investment review policy should use long-range planning; and (4) Require portfolio reviews (a) annually to consider proposed changes, (b) as new opportunities are identified, and (c) whenever a program breaches its objectives.

    Agency Affected: Department of Homeland Security

  3. Status: Open

    Comments: In providing comments on this report, DHS concurred with this recommendation, and requested that we close it because, in effect, its executive review board is approving a program's documents when it advances the program, thus satisfying the recommendation. DHS officials told us that the department had begun to implement its acquisition policy in a more disciplined manner, and that it would no longer advance programs through the acquisition life cycle until DHS leadership verified the programs had developed critical knowledge. However, we did not close this recommendation because DHS had not yet demonstrated, over time, the consistent verification of the critical knowledge captured in key documents, and we had found that nearly all of the department's major acquisition programs lacked at least some of these acquisition documents. In March 2016, GAO reported that DHS leadership had made progress in addressing this recommendation. DHS leadership had approved baselines in accordance with DHS acquisition policy for all but one of the 25 programs GAO assessed in GAO-16-338SP. DHS leadership will fully address this recommendation when it approves baselines in accordance with DHS acquisition policy for all of its major acquisition programs.

    Recommendation: To help mitigate the risk of poor acquisition outcomes and strengthen the department's investment management activities, the Secretary of Homeland Security should direct the Under Secretary for Management to ensure all major acquisition programs fully comply with DHS acquisition policy by obtaining department-level approval for key acquisition documents before approving their movement through the acquisition life cycle.

    Agency Affected: Department of Homeland Security

  4. Status: Open

    Comments: In providing comments on this report, DHS concurred with this recommendation, and stated that its effort to more fully reflect portfolio management practices in its acquisition policy will help DHS prioritize its major acquisition programs departmentwide. DHS also stated that the revised portfolio management approach will help ensure that the department's acquisition portfolio is consistent with anticipated resource constraints. In April 2016, DHS leaders stated they plan to identify whether the department's major acquisition portfolio is consistent with DHS's anticipated resource constraints in forthcoming Future Years Homeland Security Program (FYHSP) reports. DHS stated it plans to initially include this information in the fiscal years 2018-22 FYHSP report. GAO anticipates DHS will issue this FYHSP report after the President submits the administration's fiscal year 2018 budget request to Congress, during fiscal year 2017. At that time, GAO will evaluate the FYHSP report to determine whether DHS has met the intent of this recommendation by ensuring that the department's acquisition portfolio is consistent with DHS's anticipated resource constraints.

    Recommendation: To help mitigate the risk of poor acquisition outcomes and strengthen the department's investment management activities, the Secretary of Homeland Security should direct the Under Secretary for Management to, once the department's acquisition programs comply with DHS acquisition policy, prioritize major acquisition programs departmentwide and ensure that the department's acquisition portfolio is consistent with DHS's anticipated resource constraints.

    Agency Affected: Department of Homeland Security

  5. Status: Closed - Implemented

    Comments: In providing comments on this report, DHS concurred with this recommendation, and requested that we close it because DHS had amended its acquisition policy to clarify that decision authority for any program that breaches an approved acquisition program baseline (APB) cost, schedule, or performance parameter will not be delegated to component-level officials. However, the amendment DHS provided at that time did not include this language or clearly document the department's stated position. In March 2016, DHS updated its acquisition policy instruction that clarifies DHS's Chief Acquisition Officer may only delegate decision authority to the appropriate Component Acquisition Executive if the program has an approved APB and is not in breach of the cost, schedule, or performance thresholds in that APB, among other things. Further, the instruction states that decision authority automatically reverts back to the Chief Acquisition Officer for delegated programs that are in breach of their approved APB thresholds, and that decision authority is not automatically re-delegated when the program breach is resolved.

    Recommendation: To help mitigate the risk of poor acquisition outcomes and strengthen the department's investment management activities, the Secretary of Homeland Security should direct the Under Secretary for Management to clearly document that department-level officials should not delegate ADE decision authority to component-level officials for programs lacking department approved APBs or not meeting agreed-upon cost, schedule, and performance thresholds.

    Agency Affected: Department of Homeland Security

 

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